Apple's Acquisition

By Stephanie Blanchard, Digital Editor — March 26, 2013

Apple Maps, the iPhone’s proprietary alternative to Google Maps, didn’t win the hearts and minds of users when it debuted for iOS 6. In fact, the backlash was so bad, Apple CEO Tim Cook apologized. In a letter posted September 2012, Cook pledged to do better going forward.

During the Goldman Sachs conference in February, Cook also said Apple will soon be making some acquisitions. Less than six weeks later, Apple has purchased WiFiSlam, a Palo-Alto start-up, for $20 million. The two-year-old company has developed smartphone technology that pinpoints a person’s location inside a building using Wi-Fi signals.

With Apple sitting on a huge cash pile ($137 billion at the beginning of the year), $20 million is a drop in the bucket and acquiring WiFiSlam is Apple’s big play at improving its map apps.

“With the map fiasco of last year, Apple has a lot of catching up to do,” said Chris Jones, co-founder, VP and principal analyst, Canalys, in an interview with Mobile Enterprise. The app that launched with iOS 6, he said, was just not at the level expected, and the technology is already moving at a faster pace.

Altough WiFislam is not well-known in the wider market, he noted, the company offers great technology, intellectual property and a skilled team that could be incorporated into Apple’s.

Did Apple buy the start-up just to take it off the market from its major competitor?

“It’s certainly a consideration,” Jones said. The acquisition, which could potentially weaken the Android ecosystem, is both “an aggressive and defensive move.”

The Right Direction
Founded in 2010 by eight partners, including a former engineer at Google, WiFiSlam showcased its location technology at StartX, a Stanford University project for enrolled students. According to application specs published by Stanford, “a single user can create a map just by walking around arbitrarily.”

The Android app immediately attracted the attention of several tech giants and a group of angel investors, among them Don Dodge, a developer advocate at Google, provided funding.

Although he could not offer comments about the acquisition, Dodge did confirm to Mobile Enterprise that there are many potential markets for indoor location technology, including defense and intelligence, gaming, retail, hospitals and manufacturing.

"There will be several winners in each market segment, and several technology approaches," he said by email. Defense and intelligence are likely to be early adopters while advertisers will probably use the technology longer term, by targeting retail offers based on location.

"The best path to success is to choose a market segment, find some early adopter companies, and build some demonstration applications," Dodge said.

Inside Breakout
According to ABI Research, the indoor location and application space is growing, with 2013 projected to be a “breakout year.” The retail indoor location market, the firm says, will reach $5 billion in 2018.

“By virtue of having such a huge installed base of smartphone users, Apple is in a great position to be a leading player in this space,” said Patrick Connolly, senior analyst, ABI Research, in an email to Mobile Enterprise.

However, he noted, “Apple today does not have anywhere near the same ecosystem in place (indoor maps, advertising platform, local search capabilities, local business listings/pages, local offers, etc.) as its major rival Google.”

“Google offers indoor maps, geofencing, Google+ Local, Places, Zavers, Offers, Wallet, local search, etc. All of these are designed to support the emerging local business/retail market,” he said.

Where will Apple be taking this? “I think they can take this in a number of directions,” Connolly replied. “Firstly, they can create an indoor location platform on which developers can design indoor location applications and services for retailers, public buildings, hospitals, stadiums, etc.”

From a search and advertising point of view, he added, “local and hyperlocal product search are going to be vital, which again will require ubiquitous indoor and outdoor location technology.”

But if Apple wants to compete with Google, Facebook and others on hyperlocal search, Connolly explained, the company needs to start building an ecosystem quickly and working much more closely with big retailers/public building owners.

“WiFiSLAM will most likely be the first of a number of other acquisition/partnerships that Apple will need to make in this space,” he said.

In addition, “Apple has blocked Wi-Fi API access to developers, which in turn prevents all existing handset-based Wi-Fi-only indoor location technologies from operating on iOS devices,” Connolly said. “This will have to change somehow to enable WifiSLAM’s current Wifi-based solution.”

The Payoff
Blocking developers slowed things down for Apple in this arena, Jones agreed. Although it’s a fast moving space, he still does not expect anything to happen too quickly with the acquisition. The location technology might be incorporated into a future version of iOS, he noted, but not the immediate next release.

Another aspect for Apple to consider, if and when the technology is incorporated, is marketing the feature.

“How do people know there is an indoor map available? People are still looking at the mall directory, that’s happening all the time,” Jones said. Although location technology has much improved, “a lot of people aren’t aware that it’s available and better,” he said.


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